Study on Short-Form Merger Without Approval of General Meeting of Shareholders

This article addresses Delaware’s recent Amendment to the Section 251(h) of the DGCL since 2013 to facilitate short-form mergers in two-step transactions. In 2013, Section 251(h) of the DGCL was amended to allow, under certain circumstances, the second step of a two-step merger to be completed without the requirement for a shareholder vote, although the acquiring company obtains less than 90 percent of the acquired company’s outstanding stocks. Since 2013, Delaware has amended the Section 251(h) to supplement and facilitate it. From its adoption, Section 251(h) has become a preferred method of completing a tender offer in public M&A transactions because the need for a second-step merger vote in a two-step merger linking a first-step tender or exchange offer was eradicated while Section 251(h) provides a cost-effective procedure for those transactions at the same time. Delaware is the second smallest state in terms of territory and the sixth least populous state in the United States; nonetheless, it has become the most important state in the U.S. corporation law. The reasons are as follows: Delaware’s extraordinarily well-developed and management-friendly law of corporations, efficient court system that has unparalleled expertise resolving business disputes, and brand name which has developed along with its reputation as a uniquely favorable place for incorporation. In addition, Delaware affects corporate law not only in the United States, but around the world. Therefore, this article focuses on addressing Delaware’s recent Amendment to the Section 251(h) of the DGCL since 2013 to facilitate short-form mergers and discussing the implications for South Korea. In details, chapter II generally reviews the short-form merger in the United States. Part III addresses Delaware’s amendment since 2013 to facilitate short-form mergers in two-step transactions. Lastly, part IV. as a conclusion, discusses the implications for South Korea. Ultimately, to overcome current problems in processes of short-form mergers, South Korea must consider to adopt new Article in the Commercial Act like the Section 251(h) of the DGCL.